Reinstatement. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and to backwages.

Article 279 of the Labor Code provides the law on reinstatement, viz.:

Article 279. Security of Tenure. -- In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.

Section 2. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause as provided in the Labor Code or when authorized by existing laws.

Sec. 3. Reinstatement. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and to backwages.[31]

The existence of strained relations is a factual finding and should be initially raised, argued and proven before the Labor Arbiter.[32] Petitioner is correct that the finding of strained relations does not have any basis on the records. Indeed, nowhere was the issue raised in private respondents’ pleadings before the Labor Arbiter and the NLRC. Sieving through the records, private respondents first raised the issue in their Comment to Petitioner’s Motion for Partial Reconsideration before the Court of Appeals.[33] In Globe-Mackay Cable and Radio Corporation v. NLRC,[34] we emphasized that the principle of strained relations cannot be applied indiscriminately. Otherwise, an illegally dismissed employee can never be reinstated because invariably, some hostility is engendered between litigants. As a rule, no strained relations should arise from a valid and legal act of asserting one’s right; otherwise, an employee who asserts his right could be easily separated from the service by merely paying his separation pay on the pretext that his relationship with his employer had already become strained.[35]

We reiterated the rule in Quijano v. Mercury Drug Corporation, viz.:

[A]n illegally dismissed employee is entitled to reinstatement as a matter of right. Over the years, however, the case law developed that where reinstatement is not feasible, expedient or practical, as where reinstatement would only exacerbate the tension and strained relations between the parties, or where the relationship between the employer and [the] employee has been unduly strained by reason of their irreconcilable differences, particularly where the illegally dismissed employee held a managerial or key position in the company, it would be more prudent to order payment of separation pay instead of reinstatement. Some unscrupulous employers, however, have taken advantage of the overgrowth of this doctrine of “strained relations” by using it as a cover to get rid of its employees and thus defeat their right to job security.

To protect labor’s security of tenure, we emphasize that the doctrine of “strained relations” should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. Every labor dispute almost always results in “strained relations,” and the phrase cannot be given an overarching interpretation, otherwise, an unjustly dismissed employee can never be reinstated.

x x x

[T]he alleged antagonism between the petitioner and the private respondent is a mere conclusion bereft of evidentiary support. To be sure, the private respondent did not raise the defense of strained relationship with the petitioner before the labor arbiter. Consequently, this issue which is factual in nature, was not the subject of evidence on the part of both the petitioner and the respondent. There is thus no competent evidence upon which to base the conclusion that the relationship between the petitioner and the respondent has reached the point where it is now best to sever their employment relationship. We therefore hold that the NLRC’s ruling on the alleged brewing antagonism between the petitioner and the respondent is a mere guesswork and cannot justify the non-reinstatement of petitioner x x x.[36] (footnotes and emphases omitted)

In the case at bar, there are no hard facts upon which to base the application of the doctrine of strained relationship. Petitioner is correct that mere persistency in argument does not amount to proof,[37] and to deny an employee’s right to be reinstated on the basis of the mere consistency of the employer’s stand that the dismissal was for cause is to make a mockery of the right of reinstatement under Article 279 of the Labor Code.

Be that as it may, we reject petitioner’s claim for moral and exemplary damages. The award of moral and exemplary damages is proper when an illegally dismissed employee had been harassed and arbitrarily terminated by the employer, as when the latter committed an anti-social and oppressive abuse of its right to investigate and dismiss an employee. The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. It is not enough that one merely suffered sleepless nights, mental anguish or serious anxiety as the result of the actuations of the other party.[38]